Three Myths on the World's Poor

Many people think poverty is increasing around the world. But in fact things are getting better almost everywhere, say Bill and Melinda Gates. They talk with WSJ's Gary Rosen about three deeply damaging myths about global poverty and development.

By

Bill and Melinda Gates

Jan. 17, 2014 7:50 p.m. ET

By almost any measure, the world is better off now than it has ever been before. Extreme poverty has been cut in half over the past 25 years, child mortality is plunging, and many countries that had long relied on foreign aid are now self-sufficient.

Our Developing World

By almost any measure, write Bill and Melinda Gates, the world is better off now than ever before, in part thanks to foreign aid. By 2035, they predict there will be almost no poor countries left in the world. Bill & Melinda Gates Foundation

So why do so many people seem to think things are getting worse? Much of the reason is that all too many people are in the grip of three deeply damaging myths about global poverty and development. Don't get taken in by them.

MYTH ONE: Poor countries are doomed to stay poor.

They're really not. Incomes and other measures of human welfare are rising almost everywhere—including Africa.

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Take Mexico City, for instance. In 1987, when we first visited, most homes lacked running water, and we often saw people trekking on foot to fill up water jugs. It reminded us of rural Africa. The guy who ran
Microsoft
's
Mexico City office would send his kids back to the U.S. for checkups to make sure the smog wasn't making them sick.

Today, Mexico City is mind-blowingly different, boasting high-rise buildings, cleaner air, new roads and modern bridges. You still find pockets of poverty, but when we visit now, we think, "Wow—most people here are middle-class. What a miracle." You can see a similar transformation in Nairobi, New Delhi, Shanghai and many more cities around the world.

In our lifetimes, the global picture of poverty has been completely redrawn. Per-person incomes in Turkey and Chile are where the U.S. was in 1960. Malaysia is nearly there. So is Gabon. Since 1960, China's real income per person has gone up eightfold. India's has quadrupled, Brazil's has almost quintupled, and tiny Botswana, with shrewd management of its mineral resources, has seen a 30-fold increase. A new class of middle-income nations that barely existed 50 years ago now includes more than half the world's population.

And yes, this holds true even in Africa. Income per person in Africa has climbed by two-thirds since 1998—from just over $1,300 then to nearly $2,200 today. Seven of the 10 fastest-growing economies of the past half-decade are in Africa.

Here's our prediction: By 2035, there will be almost no poor countries left in the world. Yes, a few unhappy countries will be held back by war, political realities (such as North Korea) or geography (such as landlocked states in central Africa). But every country in South America, Asia and Central America (except perhaps Haiti) and most in coastal Africa will have become middle-income nations. More than 70% of countries will have a higher per-person income than China does today.

MYTH TWO: Foreign aid is a big waste.

Actually, it is a phenomenal investment. Foreign aid doesn't just save lives; it also lays the groundwork for lasting, long-term economic progress.

Many people think that foreign aid is a large part of the budgets of rich countries. When pollsters ask Americans what share of the budget goes to aid, the most common response is "25%." In fact, it is less than 1%. (Even Norway, the most generous nation in the world, spends less than 3%.) The U.S. government spends more than twice as much on farm subsidies as on international health aid. It spends more than 60 times as much on the military.

One common complaint about foreign aid is that some of it gets wasted on corruption—and of course, some of it does. But the horror stories you hear—where aid just helps a dictator build new palaces—mostly come from a time when aid was designed to win allies for the Cold War rather than to improve people's lives.

The problem today is much smaller. Small-scale corruption, like a government official who puts in for phony travel expenses, is an inefficiency that amounts to a tax on aid. We should try to reduce it, but we can't eliminate it, any more than we can eliminate waste from every government program—or from every business, for that matter. Suppose small-scale corruption amounts to a 2% tax on the cost of saving a life. We should try to cut that. But if we can't, should we stop trying to save those lives?

We've heard plenty of people calling to shut down aid programs if one dollar of corruption is found. But four of the past seven governors of Illinois went to prison for corruption, and no one is demanding that Illinois's schools be shut down or its highways closed.

We also hear critics complain that aid keeps countries dependent on outsiders' generosity. But this argument focuses only on the most difficult remaining cases still struggling to be self-sufficient. Here is a quick list of former major aid recipients that have grown so much that they receive hardly any aid today: Brazil, Mexico, Chile, Costa Rica, Peru, Thailand, Mauritius, Botswana, Morocco, Singapore and Malaysia.

Aid also drives improvements in health, agriculture and infrastructure that correlate strongly with long-run growth. A baby born in 1960 had an 18% chance of dying before her fifth birthday. For a child born today, it is less than 5%. In 2035, it will be 1.6%. We can't think of any other 75-year improvement in human welfare that would even come close. A waste? Hardly.

MYTH THREE: Saving lives leads to overpopulation.

Going back at least to
Thomas Malthus
in 1798, people have worried about doomsday scenarios in which food supply can't keep up with population growth. This kind of thinking has gotten the world in a lot of trouble. Anxiety about the size of the world population has a dangerous tendency to override concern for the human beings who make up that population.

Letting children die now so they don't starve later isn't just heartless. It also doesn't work, thank goodness.

It may be counterintuitive, but the countries with the most death have among the fastest-growing populations in the world. This is because the women in these countries tend to have the most births too.

When more children survive, parents decide to have smaller families. Consider Thailand. Around 1960, child mortality started going down. Then around 1970, after the government invested in a strong family planning program, birthrates started to drop. In the course of just two decades, Thai women went from having six children on average to having just two. Today, child mortality in Thailand is almost as low as it is in the U.S., and Thai women have an average of 1.6 children. This pattern of falling death rates followed by falling birthrates applies for the vast majority of the world.

Saving lives doesn't lead to overpopulation. Just the opposite. Creating societies where people enjoy basic health, relative prosperity, fundamental equality and access to contraceptives is the only way to a sustainable world.

More people, especially political leaders, need to know about the misconceptions behind these myths. The fact is, whether you look at the issue as an individual or a government, contributions to promote international health and development offer an astonishing return. We all have the chance to create a world where extreme poverty is the exception rather than the rule.

—This piece is adapted from the forthcoming annual letter of the Bill & Melinda Gates Foundation, of which the authors are co-chairs. Mr. Gates is the chairman of Microsoft. To receive the annual letter, sign up at gatesletter.com.

They work is remarkable and their optimism is precious. However, crossing the line of poverty according to some statistical measure shouldn’t be our main goal. The quality of society should be measured in other way: how any people cover basic needs and do they feel happy. Otherwise, all efforts in the mentioned direction aim to get control over resources and to gain new consumers for our products – we should do it much better.

These aren't "myths about the world's poor"These are myths about development in poor countries and foreign aid, and the arguments made do have some validity.But the Gates' neglect the number one, most important, myth of all about the world's poor... and about the world's rich, in rich and poor countries alike.And that myth is "the poor are poor because the rich are rich." And vice versa for that matter.It's the classic "zero sum" fallacy that ignores the reality that economic development and growth that make a few people wealthy end up benefiting everyone.Economic development and opportunity are stifled in the United States, in developing countries, and across the globe, as they once were in the Soviet Union, by the notion (and policies that follow it) that by stealing from those who've made something of themselves you somehow help those who haven't.There are few barriers to development and opportunity as poisonous as that absurd, toxic, notion.That is the myth that most of all needs to be debunked.

MR. BURBAGE - I also am troubled with the Gates's assertion that "By 2035, there will be almost no poor countries left in the world.". I further agree with several points you make but not all.

I would take the time to try to answer your question as well as I could, but the tone of your missive suggests your mind is made up.

So I will answer you briefly. Economics is a social science, a behavioral science. And the society's aggregate response to certain actions (stimulai) is not the same as the response of particular segments of the society. Secondly, one needs to earn a low wage for while to appreciate the importance, of say, additional $2 an hour. For some, this could mean, for instance, Hope.

Man earns billions in America. Then that man takes all his money overseas to other nations. Yes Bill, thanks for forgetting the nation that gave you everything.

Sure I'm glad that he is helping eradicate diseases, I think it is wonderful. It's just I'm disappointed in how wealthy seemed to have abandoned spending in US. They don't even hire locally - just outsource overseas, they spend money overseas... the only thing they do in US is make money off us and collect our taxes. This is gone too far at this point.

LOL! This is like getting a lecture on sexual harassment from Bill Clinton! Gate$$$$ would know myths, though. He's pushing one with his polio eradication nonsense. He has an overinflated self worth and he thinks he can do anything just because he's filthy rich.

Bill Gates is a good man, and I commend him for his service to the poor. But he gets one thing wrong. Norway is not the most generous nation in the world. Norway's government gives more to foreign aid as a percentage of it's budget, but that's not enough to claim the title of most generous country.

America is the only country in the world with a philanthropic culture that leads ordinary people to contribute on average 3% of their income to charity. It is utterly unique in the world, and dwarfs the amount of government aid given by any country.

William, there is a great deal of information on why many economists think that raising the minimum wage does in fact raise wages. The idea is that raising wages give creates more disposable income - raising consumer demand, companies then need to ramp up production to meet demand, and therefore hire more people.Now, it is not a perfect idea. The minimum wage was once viewed as the wage for part timers, college kids, etc. Now, it has turned out that people, unable to find better jobs, are relying on these minimum wage jobs to live. And no, we should just make the minimum wage $100/hr.

It is indeed, a conundrum. If you are, say a landscaper, hiring college kids for the summer, you may not be able to hire as many kids.That said, if the basis of your business requires you to hire people at lower than the minimum wage to succeed, maybe your business model isn't really viable. i.e 12 year olds, in a back room, making $4/an hour to manufacture goods, so that the company owner can make a larger Profit, or goods so cheap, they undercut others, paying a living wage. While that may be pure capitalism, we have not lived that way, fortunately, for a long time.

Huzzah for sanity, and Mr. Gates sees clearly. Of course he will not see this, but just in case anyone who visits his presence does see this, I'll say that I thank Mr. Gates along with Mr. Groves and Mr Noyce and Mr Kilby not only for the career I've had but for the wealth building opportunities that are increasing available to poor people around the world. This includes me. I am not jealous of the prosperity of anyone, but I do need a little more for my family and I am able to get it thanks to the efforts of the masters of the silicon universe named above.

Reading his "I am right and you are a nothing" posts, it is interesting to note that Justin Hamlin has a great need to emphasize that he is a doctor and others are of no account or plain idiots. Freud might have explained it, I am unable to.

When faced with such enormous sense of self importance, and such complete disrespect for others, with such Grandees, I am reminded of what Stalin said to Churchill about origins of princes.

Excellent point.Whenever the anti-American set go off on how little America spends on helping the poor, or on education, they inevitably mean how much the American GOVERNMENT spends.This country is not the government. And charity from this country, APART from the government, flows abundantly inside AND outside America's borders.

Mr Blow - The Gateses have a sense of Noblesse Oblige, in way that Andrew Carnegie had. Such values are anathema to those that preach the 'Me Myself and I' gospel. I think watching Bill and Melinda Gates makes them feel very bad.

What tool did Gate$$$$ create? He didn't create computers. He didn't create the internet. He didn't even create operating systems. He merely was in the right place at the right time with AN operating system.

The majority of posters here are rightwing/republican.Gates is a democrat.Poverty is an issue embraced by Democrats; dismissed by republicans.Obama recently came out in favor of continuing this country's war on poverty.To me, the above perfectly explains why Gates' honorable efforts are met here with distain and criticism.

"there is a great deal of information on why many economists think that raising the minimum wage does in fact raise wages."

Many = handful of ideologues.

"The idea is that raising wages give creates more disposable income - raising consumer demand, companies then need to ramp up production to meet demand, and therefore hire more people."

Demand raises prices, too. Hiring more people creates even more disposable income. Both are double whammies that increase inflation. Inflation devalues money. We're right back where we started, the minimum wage is still the minimum wage and isn't a living wage, thanks to the inflation that raising it caused.

"Now, it is not a perfect idea."

Nope. Not even a sane idea.

"The minimum wage was once viewed as the wage for part timers, college kids, etc. Now, it has turned out that people, unable to find better jobs, are relying on these minimum wage jobs to live."

Because every time the minimum wage is raised, you create more inflation and more minimum wage earners.

"And no, we should just make the minimum wage $100/hr."

Why not? Makes as much sense as the arbitrary $15/hr. In fact, if raising the minimum wage were truly beneficial and not harmless, it makes almost 7 times as much sense as $15/hr!

"It is indeed, a conundrum. If you are, say a landscaper, hiring college kids for the summer, you may not be able to hire as many kids."

Or any other type of employer hiring anyone at any time.

"That said, if the basis of your business requires you to hire people at lower than the minimum wage to succeed, maybe your business model isn't really viable."

Or maybe it's just that the economy is in stagflation for the 5th straight year thanks to left wing ideas like raising the minimum wage arbitrarily.

"i.e 12 year olds, in a back room, making $4/an hour to manufacture goods, so that the company owner can make a larger Profit, or goods so cheap, they undercut others, paying a living wage."

And fiction to support your claims. Nice.

"While that may be pure capitalism, we have not lived that way, fortunately, for a long time."

That's NOT pure capitalism. True, we haven't had pure capitalism for a long time, but that's UNfortunate.

According to the Bureau of Labor Statistics, 59% of employed Americans are hourly workers. Of those, only 1 in 20 is at or below minimum wage.

So the minimum wage is still predominantly reserved for only marginal workers like part timers, the unqualified, and the inexperienced. Raising the minimum wage to a "living wage" (whatever that is); would put many of these people out of work.

In a time of the lowest labor participation rate in 40 years, we need to be encouraging employers to hire marginal workers. Please remember, employer contributions to payroll tax is also based on the wage rate. We don't want to make workers even more expensive.

So true, Justin. What nonsense!Why bother to try anything if success isn't total? The eradication effort in this country was such a waste of time, and more importantly, money!And why should we care what goes on in the rest of the world, in this age of air travel?

Alex, your smarmy posts keep disappearing! Why is that? Maybe because you are focusing on personal attacks instead of the FACTS that I pointed out? I point out that I'm a doctor to show how much you missed the mark when you assume I don't know what I'm talking about and you think you do know what you're talking about. Sorry, scooter, this is MY expertise. Now get back to yours: Supersizing value meals.

There are some rich people who do good things that we never hear of. They don't have egos. Gate$$$$ does them for attention for the most part. I'd applaud good things he does if he didn't go about them in counterproductive ways. Also, if his business didn't act in such an anti customer manner.

And Henry Ford didn't invent the automobile. So what.Gates improved our productivity massively, and got rich doing so. Even better, he is now giving back.There is not much more the world can ask of anyone.

Mr. Hebner - Never, never, never will this generation of Americans be able to compete with emerging economies on wages.

So If the economy needs really low wage workers and they existing ones are too uppity to work up some honest sweat for $3 an hour, the solution is to bring back slavery. Say, a 10 year experiment, in Red States only with Tea Party Faithful rendering this valuable service to others.

We also need to consider that "marginal workers" include those whose skills have become devalued due to global outsourcing. These people and many of our young need to be retrained for skilled service work (carpentry, plumbing, auto repair) but I don't see our education system pointing anyone in that direction, just toward college. Too often our college-directed kids are graduating with degrees not much more valuable than toilet paper - if they graduate at all.

Tony: Those at the bottom have to work harder for that demand. Until the minimum wage increase inevitably slows the economy down enough that the demand adjusts down. Everyone is poorer as a result. This time, the economy adjusted down far enough, while inflation overheated, that we are now in stagflation for the second time ever, thanks to the second and third terms for Jimmy Carter proxied by Oblamer.

Your points are oft repeated by those opposing a minimum wage increase. But no one seems to follow thru on the argument.Okay, so if the wage is increased, and fewer are hired for those jobs, who will be flipping our burgers and changing our hotel sheets? Demand for the product/service doesn't decrease, so please tell us how it is met?

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